Warning!!!!!!!!

Investment Analysis Clubs Saul’s Investing Discussions
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Warning!!!

Please be aware that we can’t expect to keep rising the way we have for the past four and a half weeks indefinitely. Don’t get euphoric and start thinking that everything is going up forever. It never works that way.

Four weeks ago, when I said I thought that my stocks had hit bottom, it was a special circumstance. There had been an insane sell-off of all growth stocks, indiscriminately, and way beyond reason. All the pundits were panicking and claiming that the big, bad wolf was coming, and giving all sorts of statistical reasons that we were going into a correction. It was like pushing down and pushing down on a spring. I just felt that it couldn’t be pushed down any further without any good reason, and that it had to bounce back.

Now, our stocks have largely come back, and from now on will mostly grow based on the progress of the underlying companies (although most of them still have a little catching up to do to get back where they were before the sell-off). Let’s review them.

AFOP – a special case as it had sold off and bottomed at $11.50 a couple of months earlier, also for no reason. It since has closed as high as $22.30, up 94% from its bottom, and is now resting at $19.77

AIOCF – sold off from over $30 to $14.63 when the CFO had medical problems and left. Now, at $23.66, up about 62% from the bottom, and about 56% of the way back to where it started.

AMBA – hit bottom at about $22.50, and is up 28% at $28.90

BOFI – bottomed at $73.50 but hasn’t risen much, up just 5% at $77.10. All the news is good, and I think they’ll do fine. I suspect that they had just gotten too high, and business has just caught up to the price.

CELG – Bottomed at $138 and now up 16% from the bottom at $159.90. Their high before the sell-off was $172 so they are a little more than half way back.

CSGP – They bottomed at $155 but haven’t really gotten going again. Up just 3% at $160. Their problem is a very high PE ratio.

HZNP – Seems to have bottomed at $12.88 and is now at $15.83, up 23% and a more than half-way back to their high of $17.37.

JCOM was at $46.80 or so when I suggested that my stocks had bottomed. It’s edged up to $49.85. It has a very low beta and doesn’t move much with random movements.

KRED – Seems to be moving down in spite of just good news, which implies to me that a Venture Capitalist is unwinding a position. It’s possible that the 47 cents we saw in the past week will turn out to be the bottom. Now at 51 cents. Keep your position small.

CALL – A relatively new position for me. Closed the week when I called the bottom at $15.07. Now at $14.67, down 2.7%.

PFIE – Was at $3.96, now at $5.03, up 27%

PSIX – I said, “PSIX has been trading between $70 and $86, up and down for 11 weeks now, Moving $8 to $12 up or down each week, but not going out of the range.” It’s now at $77.20, and it’s 15 weeks.

SCTY – I said, “They closed as low as $47.75 one day last week. This week their low close was Friday, at $50.20. Hard to say if they have bottomed.” They stayed between $47 and $55 for the entire 4 weeks, until yesterday, when they announced an acquisition and jumped to $64.50. (I had sold off a third of my position to buy more of other things. I have no regrets. I still have two-thirds, and I couldn’t have based investment decisions on an acquisition out of the blue.)

SYNA – Was at $59.60. Now up over 50% at $90.30. Have presumably transformed their business with an acquisition.

SZYM – Bottomed at $9.09. Now up 34% at $12.22. Got their plant going.

UBNT – I bought as low as $30.95. It’s now up 45% at $44.80. It has been as high as $56 so it’s not in nose-bleed territory yet by any means.

WAB – I wrote, “WAB never really sold off. I love the company but I sold a bunch of my position to buy some of these other things.” It was at $74.40 and now up 9.7% at $81.60.

Z – I wrote, “Z never really sold off, but I bought some more this week anyway, being very impressed by their earnings report.” It was at $106.80 and is now up 23% at $131.10.

They all still look good, but keep your expectations reasonable, and don’t panic if we have a down week or two along the way.

Saul

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Saul, how happy are you with your position sizing? You have some positions that are much larger than average, and others smaller. Looking ahead, are you pretty content with how you have everything allocated?

Thanks again for all of your sharing.

Neil

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Saul,

Thanks so much for your insights and picks. I’ve been following along since the board started and love it.

My biggest problem is I really like all your ideas… but not enough capital. If you had $5-10K and wanted to allocate to your picks, and didn’t have a beginning position, where would you look first?

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If you had $5-10K and wanted to allocate to your picks, and didn’t have a beginning position, where would you look first?

Hi Zildjian,

First of all, I would take at least 5 positions as putting it all in one or two is just too risky.

Then it depends a bit on your temperament. If you are looking at fairly established companies, with fairly secure growth, how about BOFI, UBNT, JCOM, WAB, SYNA and maybe AIOCF. If you are looking for excitement, with more risk and possibly more gain, how about AIOCF, UBNT, PFIE, HZNP, and SZYM. That doesn’t mean there is anything wrong with the other stocks on the list, just that these called out to me at the moment. AIOCF and UBNT are on both lists as they seemed to fit both.

Saul

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Saul, how happy are you with your position sizing? You have some positions that are much larger than average, and others smaller. Looking ahead, are you pretty content with how you have everything allocated?

Good question Neil. Off the top of my head, I’d like to have a larger position in AIOCF and WAB as they are not full positions. Nothing else I’m eager to change. I generally feel good about my biggest positions, although they may be too big in relation to my smaller ones.

I sold out my small position in TSLA as I’m wondering if Elon is too much of an idealist, and too eager to spread electric vehicles instead of making money for his stockholders.

Saul

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Hi Saul,

when you say, “Off the top of my head, I’d like to have a larger position in AIOCF and WAB as they are not full positions. Nothing else I’m eager to change…” do you mean if you had readily deploy-able cash or would you wait for a little retrenchment?

WAB in particular seems to have made up a lot of lost ground recently, but of course it could keep rising!

OT - my kudos also to your/our board and hoping you’ll soon be making post #2000!

Pete

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I sold out my small position in TSLA as I’m wondering if Elon is too much of an idealist, and too eager to spread electric vehicles instead of making money for his stockholders.

Saul,

I respectfully believe the opposite. Musk’s big idealistic thinking is the very reason he is (thankfully) disrupting multiple industries that are ridiculously inefficient and in need of evolution.

I believe his genuine drive for more ubiquitous adoption of EVs and solar will be the very thing that will make money for his stockholders.

Vic

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Vic,

I hope so.

Saul

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Off the top of my head, I’d like to have a larger position in AIOCF and WAB as they are not full positions. Nothing else I’m eager to change…" do you mean if you had readily deploy-able cash or would you wait for a little retrenchment?

Pete, What I was asked was whether I was content with how things were allocated. I’d like to have more in those two stocks, but I don’t have anything I want to sell in order to buy more of them for now, so I’ll wait until I have a chance. I guess if I had the cash, I might slowly add to them.

Saul